A system of paying for bus fares in advance with pay as you go smart cards should be introduced across the country, a report by MPs says.
Outside London, many services were good but some were "not as good as they could or should be", were not reliable enough and too expensive, the report by the Transport Select Committee said.
It said the bus industry was dominated by a handful of major companies that needed to show greater leadership and address the long-term interests of passengers.
Bus passengers were treated less favourably than rail passengers despite the fact that more than three times as many people travel by bus than go by rail, the committee of cross-party MPs said.
Embracing new technology with the introduction of multi-operator smart cards, similar to London's Oyster travel card, could help raise the standard of services, it said.
MPs also said it was worrying that the Traffic Commissioners who are responsible for bus safety and monitoring punctuality lacked the resources to do their work effectively.
Partnerships between commercial bus companies and local councils also needed improving, they said.
Committee chairman Louise Ellman said: "More than five billion journeys are made by bus in Great Britain each year, to workplaces, schools, shops and hospitals.
"While some bus services are good, too often passengers are dissatisfied with the reliability of the service, the level of fares and the need to buy another ticket if the trip involves two bus companies."
Richard Hebditch, campaigns director for the Campaign for Better Transport, said: "Millions rely on buses every day, but bus services have faced really severe cuts which could lead a spiral of decline.
"The committee's report shows that there can be a way forward, but it requires the Government to work together with local councils and operators."
Local Transport Minister Norman Baker said in a recent survey by Passenger Focus, an average of 85% of bus users said they were satisfied with their service.
"We will of course carefully examine the specific recommendations for the Government and respond fully in due course," he said.
